Jobless federal workers are piling into the market as Elon Musk’s D.O.G.E continues gutting U.S. government agencies. A new report published Tuesday by Indeed shows a massive surge in job applications from employees directly impacted by the Department of Government Efficiency, which began cutting aggressively after Trump’s January 2025 inauguration.
According to Indeed’s numbers, job applications from people working at D.O.G.E-targeted agencies are up 75% compared to 2022. That spike is way beyond anything recorded after previous presidential transitions, including the ones in 2016 and 2020.
Federal workers affected by these cuts sent in 60% more applications from January to February alone, and the layoffs are still coming.
D.O.G.E pushes out long-time federal employees
Cory Stahle, an economist at Indeed, said this is the biggest job-seeking spike the site has ever recorded after an election. “We’ve never seen something like this after a presidential administration and inauguration,” Cory said. “It’s not a good time to be looking for a job.” The layoffs are hitting while the job market is already freezing over, especially for white-collar workers, many of whom were already seeing slower hiring.
The agencies being stripped down by D.O.G.E include the Consumer Financial Protection Bureau and the U.S. Agency for International Development. People in those agencies aren’t junior interns—they’re experienced specialists.
Cory said most of them have stayed in their positions for over a decade. According to federal data, the average job tenure is 11 years, and many of these workers hold bachelor’s degrees or higher. He added, “This is a really educated group of job seekers.”
They’re not just D.C. locals either. Even though nearly half a million federal workers live in Washington D.C., Maryland, or Virginia, 80% of profiles on Indeed show job seekers in other parts of the country. Cory confirmed that nearly a third of these displaced workers live in the South, outside of the DMV region.
The labor market is now more packed with mid- and senior-level candidates competing for fewer roles. Some of them have hyper-specialized skill sets, which limits where they can apply. Cory pointed out the dilemma: “If you are a displaced USDA worker with a background in horticulture, you know, what do your prospects look like right now?”
Layoffs raise fears of a recession
Scott Bessent, who now leads the Treasury Department, said on Monday that the government plans to give fired employees a shot at private-sector jobs. But the damage might not stop at layoffs. A lot of economists are warning about the ripple effect. Unemployment trends often show signs of an incoming recession. While the current numbers like the yield curve and consumer spending remain stable, experts are keeping a close eye on how things unfold in the coming months.
Claudia Sahm, former White House and legendary Federal Reserve economist, created the Sahm Rule, which flags recessions based on rising unemployment. Claudia believes D.O.G.E could push the country toward a downturn. “Many of them won’t lose their job, because we do need a certain number of federal workers to make everything go,” she told NBC News. “But at this point, there are a lot of people who are very uncertain from day to day what their employment is.”
That fear is starting to hurt spending habits. Claudia asked, “Are they going to go out and buy a house? Are they going to go buy a car?” Then answered her own question: “The very rational response would be don’t go out and buy stuff.”
She said the federal workforce only makes up less than 2% of the U.S. labor force, so on its own, D.O.G.E might not tip the country into recession. But its speed and uncertainty could amplify the risks. “The fast-moving process of D.O.G.E is adding unnecessarily to the risks,” she said in her blog. “Once they take hold, recessionary dynamics are difficult to avoid and costly to ‘fix.’”
She warned that pushing layoffs so fast means the economy can’t adjust properly. Claudia wrote, “Even so, by moving quickly and maximizing the uncertainty, D.O.G.E amplifies its aggregate risks.”
The U.S. labor force includes about 170 million people. It would take roughly 200,000 new unemployed workers to bump the unemployment rate up just 0.1%. To hit the early-recession threshold defined by the Sahm Rule, unemployment would need to climb at least half a point—almost one million more jobless people.
Claudia also pointed out that not every laid-off worker ends up unemployed. Some leave the workforce altogether. Others find work fast. But with this volume of layoffs, the chance of crossing that line increases. Keep in mind that Claudia is rarely wrong.
Speed of cuts adds to national uncertainty
The way D.O.G.E is operating is making things worse. Instead of slowly phasing out positions or offering incentives to resign, like the federal government did in the 1990s, it’s just cutting. Fast. During Bill Clinton’s presidency, for example, the government cut 350,000 jobs over six years using voluntary departures. There were no sudden jumps in unemployment. D.O.G.E, on the other hand, is moving as fast as possible, with little planning and a lot of panic.
Claudia pointed out that cutting over time helps workers land on their feet. But D.O.G.E is doing the opposite. “By moving quickly and maximizing the uncertainty,” she wrote, “D.O.G.E amplifies its aggregate risks.”
The fear among workers isn’t imaginary. Federal employees are receiving mass emails that make it clear: anyone could be next. Until the downsizing is over, most people working in federal agencies are on edge. Even those who won’t lose their jobs are holding back on spending. That’s the kind of behavior that stalls economies—what Claudia calls the “animal spirits” multiplier.
The instability is spreading outside the government too. Companies, non-profits, and universities that rely on government contracts or grants are already feeling it. Stanford University is reported to have frozen hiring because of the uncertainty around future funding.
Cryptopolitan Academy: Tired of market swings? Learn how DeFi can help you build steady passive income. Register Now